Health Care Services: How Continuing Care Retirement Communities Manage
Services for the Elderly (Letter Report, 01/23/97, GAO/HEHS-97-36).

Pursuant to a congressional request, GAO reviewed the processes of
managed care in continuing care retirement communities (CCRC), focusing
on: (1) CCRC practices for promoting wellness; (2) practices for
managing care for elderly people with chronic conditions; and (3)
evidence regarding the possible effect of these practices on health
status and costs.

GAO found that: (1) to serve their elderly residents, CCRCs GAO examined
manage care to meet the needs of both healthy individuals and those who
have chronic conditions; (2) they use active strategies to promote
health, prevent disease, and detect health problems early by encouraging
exercise, proper nutrition, social contacts, immunizations, and periodic
medical exams and assessments for all residents; (3) many of these CCRCs
also have multidisciplinary teams of nurses, social workers,
rehabilitation specialists, physicians, dieticians, or others to plan
and manage residents' care; (4) these teams meet periodically to discuss
residents' health and functional status, determine whether services are
needed, and decide on the types of treatment, services, and supports
that will be provided; (5) CCRC staff coordinate a wide range of health
and other services, whether provided on or off site, to enhance their
benefit to the individual resident; (6) active monitoring of the health
and functioning of residents who have chronic conditions, such as
arthritis, hypertension, and heart disease, is an integral part of this
coordinated, multidisciplinary approach to managing care; (7) many of
these CCRCs' practices are considered to be effective in improving the
health and functioning of the elderly, although their effect on health
care costs is largely undemonstrated; (8) regular medical exams and
health assessments, immunizations, and counseling to encourage exercise,
proper nutrition, and social interaction are all recommended by experts
and the literature as effective health promotion and disease prevention
strategies for the elderly; (9) in addition, geriatric experts recommend
a coordinated and multidisciplinary approach to manage chronic
conditions among the elderly because their care may involve many modes
of treatment and disciplines; and (10) while the health benefit of these
practices has been demonstrated, little evidence exists to demonstrate
health cost savings from either the CCRC package of services or most of
the practices individually.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  HEHS-97-36
     TITLE:  Health Care Services: How Continuing Care Retirement 
             Communities Manage Services for the Elderly
      DATE:  01/23/97
   SUBJECT:  Elderly persons
             Health care services
             Long-term care
             Elder care
             Health care cost control
             Medical examinations
             Immunization services
             Health resources utilization
             Cost effectiveness analysis
             Managed health care
IDENTIFIER:  Medicare Program
             
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Cover
================================================================ COVER


Report to Congressional Requesters

January 1997

HEALTH CARE SERVICES - HOW
CONTINUING CARE RETIREMENT
COMMUNITIES MANAGE SERVICES FOR
THE ELDERLY

GAO/HEHS-97-36

Care Management Practices in CCRCs

(101509)


Abbreviations
=============================================================== ABBREV

  CCRC - continuing care retirement community
  HCFA - Health Care Financing Administration
  HMO - health maintenance organization

Letter
=============================================================== LETTER


B-274820

January 23, 1997

The Honorable Thomas J.  Bliley, Jr.
Chairman, Committee on Commerce
House of Representatives

The Honorable James C.  Greenwood
House of Representatives

The Congress has shown interest in various models of managed care as
a way to both control the rapidly rising cost of health care services
for the elderly and ensure quality care.\1 Managed care is intended
to channel and coordinate individuals' use of health services to
achieve appropriate utilization of those services and improve health
outcomes.  Risk-based managed care, such as that offered by health
maintenance organizations (HMO) to over 50 million people, is also
expected to control costs through arrangements in which the
organization is responsible for providing or arranging health care
for beneficiaries in exchange for payment of a fixed fee.  Such
arrangements are intended to create strong incentives for managed
care organizations to manage care effectively and to help
beneficiaries maintain health and functioning.  The focus of managed
care, however, has been primarily on serving working-age adults and
children. 

In contrast, continuing care retirement communities (CCRC) focus
almost exclusively on managing various forms of care for the elderly
to help them remain healthy and functioning.  CCRCs offer retirement
living in combination with a range of health and other services that
vary by CCRC.  The services a CCRC may provide--often in a
campus-like setting--include housing; long-term care, such as skilled
nursing facility care and assisted living; various medical services,
including physician services and physical therapy; and services such
as meals, housekeeping, and recreational activities.  Most CCRCs are
private, nonprofit agencies, and many have religious affiliations. 
Currently about 350,000 residents live in approximately 1,200 CCRCs. 
About one-third of CCRCs provide long-term care for their residents
under lifetime contracts in which the CCRC assumes the residents'
risk for the cost of long-term care services.\2 These CCRCs have
incentives to encourage residents to use medical care to maintain or
improve their health and functioning and to manage residents' use of
both acute medical and long-term care services even though these
CCRCs are generally only at risk for the cost of long-term care. 

You asked us to review the processes of managed care in CCRCs and how
these relate to health care costs.  In response to your request, we
examined (1) CCRC practices for promoting wellness, (2) practices for
managing care for elderly people with chronic conditions, and (3)
evidence regarding the possible effect of these practices on health
status and costs. 

To conduct our work, we reviewed literature on CCRCs and the clinical
and cost effects of various health practices; interviewed CCRC
experts, physicians in geriatrics, and officials from the Health Care
Financing Administration's (HCFA) Office of Managed Care; and visited
11 CCRCs to examine their practices.  We chose these CCRCs because
they assume most residents' financial risk for the cost of long-term
care, are accredited by the Continuing Care Accreditation Commission,
and represent some geographic variation.  During visits and follow-up
contacts with these CCRCs, we interviewed executive officers,
administrative officials, and medical staff.  We also collected
documentation from the CCRCs on health promotion, medical screening,
and chronic disease management practices.  For a complete description
of our scope and methodology, see appendix I. 


--------------------
\1 See, for example, the Medicare Preservation Act of 1995, H.R. 
2425, which was included as title XV of the Balanced Budget
Reconciliation Act of 1995, H.R.  2491. 

\2 Typically these contracts are intended to last for the lifetime of
the resident, although some can be canceled at the option of the
resident.  In some cases the contract may be for a shorter period and
renewable at the option of the resident. 


   RESULTS IN BRIEF
------------------------------------------------------------ Letter :1

To serve their elderly residents, CCRCs we examined manage care to
meet the needs of both healthy individuals and those who have chronic
conditions.  They use active strategies to promote health, prevent
disease, and detect health problems early by encouraging exercise,
proper nutrition, social contacts, immunizations, and periodic
medical exams and assessments for all residents.  Many of these CCRCs
also have multidisciplinary teams of nurses, social workers,
rehabilitation specialists, physicians, dieticians, or others to plan
and manage residents' care.  These teams meet periodically to discuss
residents' health and functional status; determine whether services
are needed; and decide on the types of treatment, services, and
supports that will be provided.  CCRC staff coordinate a wide range
of health and other services--whether provided on or off site--to
enhance their benefit to the individual resident.  Active monitoring
of the health and functioning of residents who have chronic
conditions--such as arthritis, hypertension, and heart disease--is an
integral part of this coordinated, multidisciplinary approach to
managing care. 

Many of these CCRCs' practices are considered to be effective in
improving the health and functioning of the elderly, although their
effect on health care costs is largely undemonstrated.  Regular
medical exams and health assessments, immunizations, and counseling
to encourage exercise, proper nutrition, and social interaction are
all recommended by experts and the literature as effective health
promotion and disease prevention strategies for the elderly.  In
addition, geriatric experts recommend a coordinated and
multidisciplinary approach to manage chronic conditions among the
elderly because their care may involve many modes of treatment and
disciplines.  While the health benefit of these practices has been
demonstrated, little evidence exists to demonstrate health cost
savings from either the CCRC package of services or most of the
practices individually. 


   BACKGROUND
------------------------------------------------------------ Letter :2

CCRCs represent one form of managed care for the elderly.  Many CCRCs
have managed both acute medical and long-term care services for the
elderly for decades.  CCRCs plan, administer, and often provide these
services, in combination with housing and other services, frequently
in a campus-like setting.\3 The number of residents in a CCRC varies,
but averages about 300, most of whom are elderly people leading
active lifestyles and living in independent housing units.  Some
residents receive personal care, such as assistance in bathing and
dressing, either in their own residential units or in special
assisted living units, and some receive skilled nursing facility
care.  Residents may also receive physician, laboratory, and other
care on site.  Expenses for these and other medical services are
reimbursable by Medicare on the same basis as for the elderly who do
not live in CCRCs. 

CCRCs assess prospective residents' health and financial status to
ensure a fit with services offered and required fees.  Residents
commonly pay an entry fee to join the community and a monthly fee
thereafter.  These fees vary considerably depending on factors such
as the level of CCRC financial risk for long-term care services, the
size of the residential unit chosen, whether fees are for single
individuals or couples, and the kinds of additional services and
amenities provided.  (See app.  II for a description of the different
financial risks CCRCs assume.) In the 11 CCRCs we visited--all of
which assume residents' risk for long-term care costs--entry fees
ranged from a low of $34,000 for a studio apartment for one
individual to a high of $439,600 for a two-bedroom home for a couple. 
Monthly fees in the 11 communities ranged from $1,383 for an
individual to $4,267 for a couple. 


--------------------
\3 See The Consumers' Directory of Continuing Care Retirement
Communities (Washington, D.C.:  American Association of Homes and
Services for the Aging, 1994) for a discussion of the philosophy of
CCRCs and profiles of more than 500 individual communities. 


   CCRCS USE A VARIETY OF
   PRACTICES TO PROMOTE WELLNESS
------------------------------------------------------------ Letter :3

The CCRCs we visited use a variety of practices for health promotion,
disease prevention, and early detection of health problems to help
residents maintain their health and functioning.  These practices are
part of an approach to care that encourages CCRC residents to adopt
or maintain a lifestyle that is believed to promote good health. 
Providing activities and services, usually on site, encourages
residents to take advantage of them. 


      CCRCS ENCOURAGE EXERCISE,
      PROPER NUTRITION, AND SOCIAL
      INVOLVEMENT
---------------------------------------------------------- Letter :3.1

Many of the CCRCs we visited promote good health for their residents
by encouraging exercise, proper nutrition, and social involvement. 
Encouraging regular exercise is a common practice that CCRCs we
visited use to maintain or improve residents' health and functioning. 
CCRC efforts include having swimming pools and fitness equipment on
site, providing staff for exercise programs, and sponsoring lectures
and information on the value of exercise.  Exercise classes and
activities include aerobics, flexibility and strength exercises,
swimming, yoga, lawn bowling, and square dancing.  Residents may
participate through a formal program or on an informal basis. 
Several CCRCs also strongly encourage walking.  The campus-like
designs of some CCRCs encourage walking by locating residential
buildings within walking distance of commonly used services.  Some
campuses also incorporate nature trails or other attractive walks. 

Another common health promotion practice at CCRCs we visited is the
encouragement of proper nutrition.  Residents at many of these CCRCs
are offered three meals a day in common dining rooms, which
encourages adequate consumption of healthy foods.  Some CCRCs require
residents to have at least one of their meals each day in these
settings.  For other meals, residents may cook at home or eat
elsewhere.  The foods offered and nutrition information provided
encourage residents to eat appropriately for weight and other health
considerations.  Special diets may be provided.  At most of the CCRCs
we visited dieticians are often available for consultation and can
help residents develop individual diet plans.  CCRC officials told us
that on-site dietary counseling and nutritionally balanced meals in
congregate, attractively decorated dining areas help encourage
adequate nutrition and healthy eating habits. 

Encouraging residents to interact socially is also a common practice
among the CCRCs we visited.  CCRC officials told us that they
encourage interaction because social isolation is associated with
poorer health and functioning among the elderly.  They also said that
the physical layout of CCRCs fosters social interaction and is an
integral part of the CCRC model.  Residents live next door to each
other and may see each other frequently through visits or while
eating in congregate settings, checking mail, and engaging in a wide
range of CCRC activities.  Recreational, educational, cultural, and
volunteer activities are frequently initiated, planned, and organized
by residents.  Officials said that arranging and participating in
these kinds of activities are an important part of residents' social
interaction in the community.  Activities may include on-campus
lectures, movies, musical performances, woodworking, flower
arranging, photography, and civic and charitable activities. 


      DISEASE PREVENTION AND EARLY
      DETECTION ACTIVITIES INCLUDE
      IMMUNIZATIONS AND PERIODIC
      MEDICAL EXAMS AND
      ASSESSMENTS
---------------------------------------------------------- Letter :3.2

Many of the CCRCs we visited attempt to maintain their residents'
health and functioning through disease prevention and early detection
of health problems.  These activities are carried out by nurses,
social workers and physicians who may be either affiliated with or
independent of the CCRC. 

Most CCRCs we visited encourage immunizations against common
preventable diseases, such as flu and pneumonia, to reduce illness
and possible fatalities.  They may encourage immunization in a number
of ways, including inoculation clinics, seminars, distribution of
printed materials, and reminders from medical staff when a resident
makes an outpatient visit or has a medical examination. 

Most of the CCRCs we visited encourage early detection of health
problems through periodic medical exams and other health assessments. 
CCRC officials told us that these exams and assessments help staff
and residents to be more proactive in using effective medical
treatments and changing lifestyles to slow or reverse the loss of
good health and function. 

A combination of physicians, nurse practitioners, and social workers
may conduct elements of these exams and assessments, which may
include periodic inventories of prescription drugs used by a resident
to assess potential unwanted side effects from drug interactions,
examination of an individual's ease in walking or getting out of a
chair, and observation of changes in an individual's mental state. 
CCRC medical exams may include testing blood pressure for
hypertension and blood glucose levels for diabetes.  They may also
include tests for colon, breast, and prostate cancer as well as
vision and hearing impairments.  Residents' medical records and staff
are usually on site, making the periodic exams and assessments
convenient for residents. 

The CCRCs we visited typically encourage periodic medical exams
through seminars, written materials, and reminders such as notices
sent to residents on their birthdays asking them to schedule an exam. 
Some CCRCs follow up by telephone or other means when residents do
not schedule or appear for medical exams.  If a resident does not
come for an exam after follow-up, some CCRC officials told us that
this information is tracked and an exam conducted when the resident
next comes in for outpatient care because of illness. 


   CCRCS USE A MULTIDISCIPLINARY,
   COORDINATED APPROACH TO MANAGE
   CHRONIC CONDITIONS
------------------------------------------------------------ Letter :4

CCRCs we visited use a multidisciplinary, coordinated approach to
manage care for their residents with chronic conditions such as
hypertension and heart disease.  Essential elements of this approach
include a wide range of on-site services, coordination of services to
ensure residents receive them in an appropriate and timely manner,
and active monitoring of residents with chronic conditions.  The
prevalence of chronic conditions increases substantially with age,
and CCRC officials told us that properly managing these conditions
helps maintain residents' functioning while delaying or reducing use
of costly services such as hospital care. 


      CCRCS OFFER A WIDE RANGE OF
      HEALTH AND OTHER SERVICES ON
      SITE
---------------------------------------------------------- Letter :4.1

CCRCs we visited offer a wide range of services on site to manage
care for residents with chronic conditions.  These services may
include primary health care, care by specialists, skilled nursing
care, and laboratory testing.  Other services may include physical
therapy, social work, personal care, dietary counseling, home chore
service, and transportation.  Various combinations of services may be
provided across a range of settings, including an outpatient clinic,
a skilled nursing facility, or a resident's own home. 

In addition, some of the CCRCs we visited adapt their health
promotion and wellness programs to help meet the needs of residents
with chronic conditions.  For example, they may modify a regular
exercise program to help people with arthritis retain the ability to
walk.  Similarly, these CCRCs may encourage and help those with
chronic conditions to continue regular social interaction through
special arrangements.  For example, a resident who can no longer walk
to recreational events and congregate eating areas may be provided
with an electric cart so that he or she can remain independent. 

CCRC officials told us that having a wide range of services on site
makes it possible to manage most of the care of residents with
chronic conditions within the community even when the needs are
intense.  CCRC officials said that residents less frequently need
care at hospital emergency rooms or as many days of hospital care
when admitted because they have access to physicians, nursing care,
and other services at the CCRC.  The availability of a skilled
nursing facility where residents can easily be admitted from the
hospital or from home for short stays may also help return residents
more quickly to their homes, according to these officials. 


      COORDINATION AND ACTIVE
      MONITORING USED TO MEET
      RESIDENTS' NEEDS
---------------------------------------------------------- Letter :4.2

CCRCs we visited typically coordinate services to enhance their
benefit for residents.  CCRC staff coordinate various services
provided by both CCRC staff and other providers whether on site or
off.  For example, a CCRC may coordinate an arthritic resident's pain
relief medication, specialized exercise program, home modifications,
the availability of walkers or other ambulatory aides, and periodic
assistance with dressing or bathing to help the resident stay as
functional as possible and to reduce or delay the use of more
intensive services.  Multidisciplinary teams may facilitate
coordination through joint team assessments and the development of a
plan of care.  Teams meet regularly to reassess needs and services. 
CCRC officials told us that nursing staff generally serve as the
focal point for convening teams and providing ongoing coordination of
services between team meetings.  Some CCRC officials said that
nursing and social work staff usually have day-to-day responsibility
for coordinating services and troubleshooting when problems arise. 

CCRC officials told us that they actively monitor residents with
chronic conditions.  Staff oversees the plan of care developed for
each resident with chronic conditions to ensure that the resident is
receiving needed services.  Monitoring can include simply verifying
that a resident has visited the clinic as prescribed or kept a
scheduled appointment with the physical therapist.  Or professional
care staff may review medical records, visit or call the resident at
home, or call other service providers to verify that care was
received.  Frequent monitoring is necessary in some cases because a
resident's physical and mental condition can change quickly and
require different services.  For example, CCRC staff may check more
frequently if episodes of pain may impair an arthritic resident's
ability to walk or dress unassisted. 

CCRC officials told us that nonmedical staff and the residents
themselves can also be important in the monitoring process.  Some
CCRCs we visited train food services staff, residential and grounds
crews, and other staff to recognize potentially serious problems that
residents may have and to report this information to clinical or
social work staff.  For example, a housekeeper may inform clinical
staff that an individual with some memory loss has burned pots on the
stove or that a resident with arthritis is unable to get out of bed
on a particular day.  In addition, some CCRCs encourage residents to
notify them when they see or suspect that another resident may need
assistance.  In some CCRCs, buddy systems are developed in which two
residents agree to contact or watch out for each other regularly. 
When problems are reported, clinical staff call or visit residents to
investigate and respond as needed. 


   CCRC PRACTICES MAY PROVIDE
   HEALTH BENEFITS BUT EFFECT ON
   COSTS IS LARGELY UNDEMONSTRATED
------------------------------------------------------------ Letter :5

Many of the practices we identified in CCRCs for health promotion,
disease prevention, and early detection of health problems are
credited by experts and the literature with reducing the risk of
disease and disability and improving health and functioning among the
elderly.\4 Among the measures considered to be effective are regular
physical exams that include screening for early detection of
conditions such as hypertension, colon cancer, breast cancer, and
vision and hearing loss, and immunization against flu and pneumonia. 
Education and counseling to encourage exercise and proper nutrition
are also recommended.  Regular aerobic or conditioning exercise
reduces the risk of coronary heart disease, diabetes, and obesity,
and exercises to improve strength, flexibility, and balance may
reduce the risk of falls and fractures.  Encouraging social
interaction may also reduce isolation, which is associated with
poorer health and functioning among the elderly. 

The coordinated, multidisciplinary approach to chronic disease
management used by the CCRCs we visited is also consistent with the
recommendations of geriatric care experts and is supported in the
literature as effective in slowing the progression of disease and
restoring loss of function.  Multiple interventions are often used in
managing many chronic conditions that are common among the elderly,
such as hypertension, cardiovascular disease, and arthritis.  These
methods may include drug therapy, physical and occupational therapy,
behavior modification, counseling, and use of special medical
equipment.  Experts told us that because care for older people with
chronic conditions may involve many modes of treatment and
disciplines, it needs to be organized, coordinated, and managed. 
Crucial to effective care management, they said, is providing
periodic monitoring and follow-up both to ensure that the chronic
condition is being controlled and to minimize any negative effects of
treatment. 

While evidence exists for the effectiveness of many of the practices
we found in these CCRCs, their effect on health care costs and use of
health services has not been conclusively demonstrated.  With the
exception of flu immunizations and medical screening for certain
forms of cancer, such as breast and colon cancer, little evidence
exists to demonstrate clearly the cost-effectiveness of most of the
individual health promotion and chronic disease management practices
used by the CCRCs.\5 Furthermore, CCRC residents tend to be very
different from the general elderly population on a number of
important sociodemographic, health, and other measures.  No studies
have been conducted that adequately consider these factors in
assessing the effect of the CCRC package of services on health
costs.\6


--------------------
\4 See R.L.  Berg and J.S.  Cassells (eds.), The Second Fifty Years: 
Promoting Health and Preventing Disability (Washington, D.C.: 
Institute of Medicine, Division of Health Promotion and Disease
Prevention, 1990).  See also U.S.  Preventive Services Task Force,
Guide to Clinical Preventive Services, 2nd ed.  (Baltimore, Md.: 
Williams and Wilkins, 1996). 

\5 The Second Fifty Years and Guide to Clinical Preventive Services. 

\6 People choosing a CCRC tend to be better educated and wealthier
than the general elderly population and are healthier when moving
into the CCRC than others their age.  The full effect of these
differences has not been accounted for in studies comparing CCRC
residents' use of health services with that of elderly residents
living in non-CCRC settings. 


   AGENCY COMMENTS
------------------------------------------------------------ Letter :6

Because no federal agency or program was the focus of our review, we
did not seek agency comments.  We did, however, have a number of
experts in geriatric medicine and continuing care retirement
communities review a draft of this report.  They generally agreed
with its contents and provided technical comments that we
incorporated as appropriate. 


---------------------------------------------------------- Letter :6.1

We are sending copies of this report to the Secretary of Health and
Human Services; the Administrator, Health Care Financing
Administration; and other interested parties.  Copies of this report
will also be made available to other interested parties on request. 


If you or your staff have any questions, please call me at (202)
512-7119 or Bruce D.  Layton, Assistant Director, at (202) 512-6837. 
Other major contributors to this report are James C.  Musselwhite,
Eric R.  Anderson, Ron Viereck, and Carla Brown. 

William J.  Scanlon
Director, Health Financing and Systems Issues


SCOPE AND METHODOLOGY
=========================================================== Appendix I

We focused our work on practices that 11 continuing care retirement
communities (CCRCs) use to maintain or improve the health and
functioning of their elderly residents and to manage the use of
health and other services by residents with chronic conditions.  We
also examined what is known about the possible health and cost
effects of these practices.  To address our study objectives, we (1)
visited 11 CCRCs to examine care management practices, (2) reviewed
the literature on CCRCs and on health and cost effects of CCRCs'
practices, and (3) interviewed experts on CCRCs and geriatric
medicine as well as officials from HCFA's Office of Managed Care. 

The 11 CCRCs we visited in California, Maryland, Pennsylvania, and
Virginia (see table I.1) were selected primarily for three reasons. 
First, they assume most residents' financial risk for the cost of
long-term care (see app.  II for a description of CCRC financial risk
arrangements for long-term care costs).\7 These financial
arrangements provide incentives to manage health and other services
so that residents remain healthy and functioning as independently as
possible and so that costs are controlled.  Second, these CCRCs are
accredited by the Continuing Care Accreditation Commission.\8 Third,
they represent some range of geographic variation.  Our findings from
this sample of CCRCs, however, cannot be generalized to all CCRCs, to
CCRCs that are at financial risk for most residents' long-term care
costs, or to those that are accredited. 



                               Table I.1
                
                          CCRCs Visited by GAO

Name of community                   Location
----------------------------------  ----------------------------------
California
----------------------------------------------------------------------
Casa Dorinda                        Montecito

Mt. San Antonio Gardens             Pomona

The Sequoias-San Francisco          San Francisco

The Tamalpais                       Greenbrae


Maryland
----------------------------------------------------------------------
Broadmead                           Cockeysville

Collington                          Mitchellville

Fairhaven                           Sykesville


Pennsylvania
----------------------------------------------------------------------
Foulkeways at Gwynedd               Gwynedd

Kendal at Longwood                  Kennett Square

Pennswood Village                   Newtown


Virginia
----------------------------------------------------------------------
Goodwin House                       Alexandria
----------------------------------------------------------------------
We conducted structured interviews to obtain information from CCRC
executive officers, administrative officials, and medical staff
regarding the practices used for health promotion, disease
prevention, medical screening, and management of chronic conditions. 
In addition, we collected documentation on services provided and
residents' contracts, and we directly observed some CCRC activities,
programs, campus buildings, and grounds used by residents.  We
conducted telephone follow-ups to obtain additional information from
CCRC officials as needed. 

To examine the potential health and cost effects of CCRC practices,
we reviewed the literature and interviewed selected experts in
geriatric medicine regarding generally accepted practices or
guidelines for health promotion, disease prevention, medical
screening, and management of chronic conditions.  We also interviewed
officials from HCFA's Office of Managed Care. 

We conducted our review between June and November 1996 in accordance
with generally accepted government auditing standards. 


--------------------
\7 In a 1995 survey of CCRCs by the American Association of Homes and
Services for the Aging, 35 percent of the 456 respondents reported
that they offer contracts placing them at full risk for a resident's
long-term care not otherwise reimbursed by third parties such as
Medicare. 

\8 See Accreditation Handbook (Washington, D.C.:  Continuing Care
Accreditation Commission, 1994) for a description of the
accreditation process. 


CCRC RISK ARRANGEMENTS FOR
LONG-TERM CARE COSTS
========================================================== Appendix II

CCRCs assume different levels of financial risk for the costs of
their residents' long-term care services, such as nursing home care
and assisted living services.  These long-term care services are
provided in combination with housing, residential services such as
cleaning and meals, and related services.  CCRCs' financial risks for
residents' care are defined in lifetime contracts between the CCRC
and the individual resident.\9 A CCRC may offer more than one type of
long-term care risk arrangement from which residents may choose. 

FULL RISK

Some CCRCs are at full financial risk for the cost of long-term care
services.  This means that the CCRC must pay all the costs of
long-term care services residents need except for those costs that
may be reimbursed by third parties such as Medicare.  These CCRCs
typically require that residents pay an entrance fee and a monthly
fee that includes prepayment for long-term care costs, similar to an
insurance arrangement.  The monthly fee can increase based on changes
in operating costs and inflation adjustments but not because of the
use of long-term care services.  As a result, residents having these
agreements are not at risk for covered long-term care costs.  This
kind of agreement is sometimes known as a life care agreement or an
extensive or Type A contract. 

PARTIAL RISK

Some CCRCs are at partial financial risk for the cost of long-term
care services.  These CCRCs must pay some, but not all, of the costs
of long-term care services for residents beyond those reimbursed by
third parties such as Medicare.  The financial risk of these CCRCs is
limited by a cap on the amount of long-term care services for which
the CCRC will pay.  For example, for each resident, a CCRC may pay
for a maximum of 30 or 60 days of nursing home care per year,
whatever limit is specified in the resident's contract.  Under these
arrangements, CCRCs typically require that residents pay an entry and
monthly fee, which may be lower than the fees for arrangements under
which CCRCs assume full financial risk for the costs of long-term
care.  Until the cap on long-term care services is reached,
residents' monthly fees under the partial risk agreement can increase
based on changes in operating costs and inflation adjustments but not
as a result of the use of long-term care services.  If the contract
cap is reached, however, the resident is at risk for the cost of all
additional long-term care services not reimbursed by third parties. 
This kind of agreement is sometimes known as a modified, limited
services, or Type B contract. 

NO RISK

Some CCRCs are not at risk for the cost of long-term care services. 
These CCRCs require residents to pay for services they use either
through a combination of an entry fee and a monthly fee or through a
monthly fee alone.  Monthly fees in either payment arrangement can
increase based on operating costs, inflation adjustments, and the use
of long-term care services.  As a result, residents are at risk for
all long-term care service costs not reimbursed by third parties such
as Medicare.  When this kind of risk arrangement is based on a
combination of an entrance fee and a monthly fee it is sometimes
known as a Type C contract.  When it is based only on a monthly fee
it is sometimes known as a Type D contract.  Under either Type C or D
contracts, residents typically pay lower fees than under Type A or B
contracts unless long-term care services are needed. 


--------------------
\9 Typically these contracts are intended to last for the lifetime of
the resident, although some can be canceled at the option of the
resident.  In some cases the contract may be for a shorter period and
renewable at the option of the resident. 


*** End of document. ***